Kuala lumpur: Rising healthcare utilisation is emerging as a key contributor to Malaysia's medical claims inflation, highlighting the need for greater efficiency, transparency, and collaboration across the healthcare ecosystem to keep medical protection affordable and sustainable, according to the Life Insurance Association of Malaysia (LIAM).
According to BERNAMA News Agency, LIAM's chief executive officer Mark O'Dell stated that while medical claims inflation reached 12.28 percent in 2025, data from the Malaysia Medical Claims Inflation Report 2025 showed that 11.22 percentage points of the increase were driven by a higher number of claims, with the balance attributable to the rising cost of care. O'Dell emphasized that medical claims inflation and medical cost inflation are distinct, with increased utilisation being a significant contributor to the growth in medical claims.
O'Dell clarified that the 12.28 percent medical claims inflation rate should not be interpreted as an equivalent increase in the cost of medical treatment. He stressed the importance of seeking necessary treatment while ensuring that healthcare is used appropriately and efficiently, delivering good health outcomes at sustainable costs.
He also noted that the cost of care varied across different healthcare settings, with public and teaching hospitals, which accounted for 9 percent of total claims, recording a 14 percent decline in cost, while costs rose by 5.9 percent in private hospitals and 2.3 percent in private day-care facilities. The insurance and takaful industry paid RM13.5 billion in medical claims in 2025, compared to RM12.2 billion in 2024, reflecting a 10.7 percent rise.
O'Dell highlighted that the increase in utilisation should not be viewed solely as negative but can also reflect positive developments such as increased health awareness, earlier detection of illnesses, improved access to treatment, and Malaysians seeking treatment sooner. The goal is to ensure that healthcare resources are used appropriately, with patients receiving the right care in the right setting at a sustainable cost.
He stressed the importance of greater transparency, appropriate care pathways, better use of data, and stronger measures to address fraud, waste, and abuse in contributing to a more efficient healthcare system. O'Dell also pointed out that the rising claims trend should not be viewed as an issue involving insurers and takaful operators alone, as medical claims reflect developments across the wider ecosystem.
Ensuring Malaysians have access to quality healthcare while keeping the overall cost of financing sustainable is crucial, as medical claims account for around 75 to 80 percent of insurance premiums and takaful contributions. O'Dell emphasized that structural reforms across the ecosystem are important, aiming not just to reduce claims but to ensure every ringgit spent on healthcare delivers value.
He concluded by noting that the industry expects medical claims growth to remain elevated in the near term due to continued utilisation and service intensity, making longer-term reforms increasingly important. The industry is working closely with stakeholders under the Reforming the Medical and Health Insurance/Takaful Ecosystem (RESET) agenda to achieve better health outcomes, greater transparency, more efficient use of resources, and sustainable healthcare financing.